Pieris Pharma (NASDAQ:PIRS) CEO Interview

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Pieris Pharma
CEO: Steve Yoder


WSA:  Good day from Wall Street.  This is Juan Costello, Senior Analyst with the Wall Street Analyzer.  Joining us today is Steve Yoder, the CEO of Pieris Pharma.  The company trades on the NASDAQ.  Ticker symbol PIRS.  Thanks for joining us today there Steve.

Steve Yoder: Thanks for having me Juan, it’s a pleasure.

WSA: Certainly, so starting off please give us a brief description of Pieris for some of our listeners that are new to the story?

Steve Yoder:  Sure, Pieris Pharma is a clinical-stage biotech company.  We discovered in developing this patented highly differentiated new class of therapeutic protein drugs that we call Anticalins and our strategy simply put is to do things that you cannot readily do with more traditional protein drugs like monoclonal antibodies and do those things with our Anticalins.  And the Pieris management team actually has in fact quiet a lot of time in former lives working in monoclonal antibody companies learning firsthand what antibodies can and cannot do, so this creates an exciting opportunity.  Fundamentally the story starts with Anticalins.  So, what are they?

Well, they are proteins that we at Pieris derive from a class of naturally occurring human proteins that are called Lipocalins and Lipocalins are these easy to handle specific binding proteins that are in our own bodies and they bind to a wide range of targets.  And what we do is you got proprietary protein engineering knowhow to use these Lipocalins as so called protein templates and we manipulate the areas responsible for target engagement to redirect their binding, so they are no longer binding to their natural target; but they will for the very first time bind to the therapeutic target of choice that we choose and these are the antibodies.  Anticalins ironically share several attributes that belong to antibodies, both are human derived, they are naturally non-immunogenic, they are high affinity binding proteins to a wide range of targets in the body and let’s phase it.

Antibodies are truly amazing and successful drugs and they are changing patients lives you know for the better largely because of these characteristics, which result quite simply in proteins that have excellent Drug-like properties.  Now we think these similar features of Anticalins are likewise going to be important as we developed them for the first time as drugs; but I want to be clear that we are not trying to duplicate what is being done with antibodies.  Although Anticalins, you know do share many of the beneficial properties as I mentioned with monoclonal antibodies.  They do have a number of unique advantages due to their small size and their simple structure and that allows us to have programs that are highly differentiated over antibodies.

A couple of them, maybe three just to highlight at the outset which, these are features that are manifested in our proprietary pipeline and these are programs in anemia, asthma and oncology specifically the hot area of immune oncology and so getting on to one feature that is very different than antibodies, we are able to adjust the half-life or the residence time in the body from hours to weeks depending on the particular objective we were trying to achieve.  Now the potential benefits of having a shorter systemic half-life compared to an antibody they’re represented by both our anemia and our asthma programs both of which have a shorter half-life than in antibodies, which we purposefully designed into these molecules.

Second, unlike antibodies the small size and robustness of Anticalins enable novel delivery opportunities, which includes the ability to have inhaled delivery for the lungs and when you consider that asthma is a disease of the lung the benefits of having a locally administered drug directly to the side of the disease should become immediately clear.  This is contrasted with monoclonal antibody approaches for asthma, which although showing great promise they are delivered via a syringe into the arm as a subcutaneous injection in much higher quantities than what we plan to do with our inhaled Anticalins.

And then third and finally for today’s discussion again highlighting the simple makeup of Anticalins, this allows us to construct multi-specific proteins in a rather straightforward manner where we are genetically linking multiple Anticalins together sort of like a strand of pearls for the purpose of engaging multiple targets at the same time as one drug.  This technique is really the hallmark of our immune oncology franchise where our bio specific molecules we believe will allows us to direct an immune response preferentially to the tumor microenvironment and this is important because we believe it has the potential to address cancer patients who are not responding to the treatments of today.

And those are the three fully proprietary programs that we believe have great potential and show differentiation of the technology; but beyond that maybe the last words as part of the introduction to Pieris is that beyond that we also have several partnering programs with the license Sanofi, Daiichi Sankyo.  These enables several short-term goals, it creates many ways to win here.  All together we have upwards of 10 Anticalins programs and other clinical and preclinical development, each of which is targeting very large markets.  And so given the balance nature of our pipeline we really have a mixture of the fully proprietary programs as mentioned, the fully out-licensed programs with Big Pharma and then a number of co-development programs we believe we’ll be able to realize a lot of upside while being capital efficient.

WSA: Great and can you go over some of the recent news there that you had over the last month or two?

Steve Yoder: Sure, I mean given our partnering model and the several therapeutic programs that we have in development we’ve historically had a lot of news flow and expect this trend to continue.  You can check this out by going to our press release archive at pieris.com, but two recent announcements have happened that I would like to expand upon today.  The first one concerns a lot about partnerships, earlier this month we announced we had received our seventh milestone payment from Daiichi Sankyo and this is a collaboration to develop multiple Anticalin therapeutics.  This is the third milestone alone for this program and it was triggered by the achievement of positive in vivo proof of concept data pre-clinically and the successful completion of a toxicity study in monkeys, which assesses some of the safety of the molecule at artificially high doses.

As I mentioned we have two programs, one is Daiichi Sankyo.  We have the ability to receive significant milestone payments.  We have received already a lot of committed research funding and we expect to receive additional milestone payments as this program progress into and through the clinical trials.  This partnership alone could result in us receiving more than €100 million per program and that didn’t combine licensing fees and milestones both preclinical and clinical milestones and commercial milestones and beyond that we would receive royalties on that sales from any Anticalins that make into the market.

Importantly, we expect the first program within the Daiichi collaboration to potentially enter clinical trials as early as the fourth quarter of this year.  So, this brings not only material milestone and come to Pieris, but also additional validation of the Anticalin drug class with more data in human subjects.  The second recent announcement that I would like to highlight is the successful completion of the $25 million IPO underwritten transaction at the end of June, which was coupled to a simultaneous uplisting to NASDAQ, which removes we think any near term balance sheet risk and provides significant working capital to advance each of these three fully proprietary programs to inflexion points of the three that I mentioned earlier and just to be clear what we intend to do with the capital, we want to do three things.

We want to number one complete a phase 1/B2A study in our patient population for the anemia program, which is end stage renal disease patients who have a specific type of anemia.  We want a complete a first immense study with our inhaled asthma program and we want to reach IND readiness for our immune oncology multi-specific program, which essentially means completing all of the manufacturing and regulatory requirements before dosing our first cancer patient.  With respect to this underwritten transaction we completed this financing using a very well respected syndicate of healthcare banks.  This included Oppenheimer, JMP Securities and ROTH Capital Partners and the majority of our investors were large institutional biotech firms including our lead investor OrbiMed, which is largely regarded as one of the top biotech investors on the street.

This NASDAQ listing as I mentioned, which happened simultaneously with the fundraising has already made a very material impact on the daily average training volume of our shares and we think this should better position us for increased interest from those additional institutional investors.  On a broader note this recent underwritten financing brings a total amount of capital that we’ve received from investors to just over $110 million and when you couple that with the more that $40 million we received from all of those partnerships I’ve mentioned that’s in licensing fees, milestone payments as well as being very successful with grant funding, which is about $15 million.

The total amount of capital influenced to Pieris exceeds $165 million and then finally with respect to this existing investor base we’re really proud to have a number of esteemed biotech investors who have made considerable investments in Pieris and have been long supporters of the company including Lombard Odier, Novo Nordisk, Sphera Funds, Ally Bridge Group; a number of good healthcare and venture capitalists out of Europe with Gilde and Forbion out of the Netherlands, Global Life Science Ventures in Germany and of course OrbiMed who now have nearly a 20% stake in Pieris.  And finally I would mention that the Chairman of our Board of Directors Chau Khuong is a partner at OrbiMed.  You can see that they are certainly committed to that Pieris story.

WSA: Great and so Steve can you talk about some of the key trends that you are seeing right now in the sector and how the company is positioned to capitalize?

Steve Yoder: Sure, well we all know that biotech’s and life sciences in general had a wonderful round in the past couple of years and I think that’s because of the transformative science that we’re actually seeing being developed and although amazing breakthroughs have been witnessed in the past few years in biotech, particularly in immune-oncology where the promise of a cancer cure is now something we there talk about for the first time.  There are currently many diseases including even in oncology with substantial unmet medical needs where researchers and they’ve simply been unable to develop therapies that tackled the needed combination of being both efficacious and safe for patients.  And we believe that the unique attributed of the Anticalin biform went appropriately deployed, maybe applicable to a number of these indications.

When you think about it, having full ownership of an entirely new class of therapeutic drugs puts us in an enviable position.  As I’ve mentioned we’ve partnered at an early stage already with several multinational bio-pharma companies for the development of Anticalins myriad indications.  This partnering, it relieves us from the burden of funding research, development, clinical trials on some programs, that allows upside in the form of milestone and royalties and in some cases retain commercial rights in major market; but as I mentioned we also have a number of these full proprietary programs, you know that we’re solely developing to develop in very large markets such as anemia and asthma.

These are two areas that have crisp clinical readouts and they involved targets or mechanisms of action that are sufficiently validated to justify our approach with Anticalins.  In that they bring differentiation over monoclonal antibodies without having to take too much target biology risk and we believe that we can because of these particular disease areas in the way we are designing our development we can develop a number of these with the cash on hand to a clinical stage, leaving open the prospect of we’re going in alone as we’re a public company or the prospect of partnering with large pharma partners when the deal term such as upfront milestone and royalty payments may be substantial once we have those clinical inflexion points.

WSA:  And I know you highlighted this at the beginning, can you give us an overview of some of the products there in your portfolio and some of the recent progress that you had and also future milestones?

Steve Yoder: Yes, as I mentioned we have about 10 Anticalin programs and developments.  This diversifies risk, it gives us several shot term goals and many ways to win.  I mean one of the programs is this anemia program, which is in chronic kidney disease patients.  It’s an Anticalin that antagonizes a target called subsidence.  In certain anemia patient populations, an excess amount of subsidence thus – Anticalin does cause anemia and the good thing is that we have a pretty straightforward way to find those patients through biomarker-based stratification.  That translates into more controlled trial sizes, more efficient cost effective drug development.

With that program we’ve recently completed dosing of healthy volunteers in a blinded placebo-controlled phase 1 trial and this is with an Anticalin is called PRS-080 and we completed this trial in June and we expect to report the data from this trial in an unblinded data in the third quarter.  Although the data have not yet been fully unblinded we already have reported publically that no DLTs, Dose-Limiting Toxicities were observed and a maximum tolerated dose was not reached and so with this we believe it speaks to the good drug like properties of the Anticalin drug class.

Now we also have, you know two other proprietary programs.  The one for asthma, which is in preclinical development and we expect to get into the clinic no later than the first quarter of 2017.  Of course the addressable market for asthma is huge with an estimated worldwide patient population of about 19 million patients whom we’re targeting, these are uncontrolled moderate to severe asthmatics and more than one billion in peak sales potential for this program once it would receive approval.

The other, the third and final one is this multispecific Anticalin based program in this hot area of immune-oncology.  So what we are doing now is conducting preclinical experiments on a number of lead candidates and by the end of this year and we are going to try to do this as quickly as possible.  We expect to choose a drug candidate for formal IND enabling studies and this is typically an 18 to 24 month process for biologics, so this would mean clinical initiation projected around the end of 2017 in cancer patients.

WSA: Great and perhaps you can provide us with a history and background of the company along with key management and talk a little bit about the investment outlook?

Steve Yoder: Okay, so we were founded in 2001 essentially as a spinout from the Technical University of Munich in Germany and the company has been based in Germany since then.  Many of us in the management team worked together down the road and are formalized at another German success story called MorphoSys, which is a monoclonal antibody company.  Also with a strong partnering mindset and had a number of short-term goals.  Today it has a market valuation of about $2 billion and one of the things that attracted me to Pieris five years ago with a lot of raw ingredients that was similar I thought for MorphoSys.

The proprietary protein based drug class, the relevance I believe for partnering with Big Pharma, I think we’ve shown we can do that and a team that has kind of been there and done that before and we are trying to maybe emulate and improve approve upon that model and have many short term goals and looking really just to disseminate this technology.  Broadly but smartly, try to really grow the company with this diversified risk approach.

So, in terms of the growth opportunity for Pieris while our current amazing drug discovery and protein engineering operations will remain in Germany, as part of our strategy to take advantage of the robust capital markets and the top talent pool in the US we’re formally let’s say moving our corporate headquarters to Boston, Massachusetts very soon.  That includes my relocation back to the states after more than 13 extremely fulfilling years in Germany.  We went public as I mentioned in December of last year 2014 here in the US initially on the OTC Bulletin Board and the end of June now we’ve completed this underwritten offering that’s taken us up to NASDAQ.  And as we established operations in Boston we planned to enlarge the team that will be focused on the drug development and regulatory side, taking advantage of being what is generally regarded I think everyone recognize it as the number one biotech hub in the world and currently our CFO in Boston is also with me as we build out our operations in the US.

WSA:  Great and once again joining us today is Steve Yoder, the CEO of Pieris Pharma.  The company trades on the NASDAQ, ticker symbol PIRS, current trading at $2.70 a share, market cap is around a $104 million and before we conclude here Steve to recap some of your key points.  Why do you believe an investor should consider a company as a good investment opportunity today?

Steve Yoder:  Well, I would say imagine if a single company could say it owns an entire class of drugs like antibiotics, like statins, like stem cells or even like monoclonal antibodies.  So, we have in fact developed an entirely new class of patented and proprietary therapeutic drugs called Anticalins.  Now it’s going to take some time to see if Anticalins become this prominent class of drugs like the ones I mentioned; but in the meantime we’ve had several multinational biopharma partners from whom we’ve already received more than $40 million in licensing income with the potential for hundreds and millions more in milestone income in the future.

We’ve raised over a $100 million from esteemed biotech venture funds including OrbiMed, and from evaluation perspective with the closing of this recent $25 million underwritten offering, we have over $30 million dollars in cash; we have a market valuation of just a $100 million.  If you take all of that into consideration I believe Pieris has a compelling investment opportunity at it’s current price in given the nature of how we went public, the fact that geographically speaking we are bit off the beaten path.  I think we are a promising company just waiting to be discovered.

WSA:  Well, we look forward to continue to track the company’s growth and report on your upcoming progress and we would like to thank you for taking the time to join us today Steve and update our investor audience on Pieris Pharma.  It was great having you on.

Steve Yoder: Well, thanks again Juan for the opportunity I really enjoyed my time today.  Thank you.


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